Parenteau: Judge Murtha’s questions in Entergy case appear favorable to the state

Editor’s note: This op-ed is by Patrick Parenteau, a professor at Vermont Law School. It first appeared on the VLS faculty commentary blog.

At the close of the trial on Wednesday, U.S. District Court Judge J. Garvan Murtha paid obligatory compliments to the lawyers for both sides in the Entergy v. State of Vermont case and then posed a series of provocative questions that must be addressed in post-trial briefs (as if he wasn’t already buried in paper).

First, he requested additional analysis of what lawyers call the equity issues — waiver, estoppel, laches and unclean hands. Second, he asked the parties to brief the issue of whether section 248 of Vermont’s energy facilities law was “severable” form the other statutes that Entergy has challenged (Acts 74, 160 and 189). Finally, he asked Entergy to spell out exactly what kind of relief it was seeking.

What clues, if any, do these questions provide into the judge’s thinking? First, a brief explanation of these arcane equity issues.

Waiver: This refers to the infamous 2002 memorandum of understanding (MOA) that we have addressed many times in past blog posts. The question is, did Entergy waive its right to sue the state when it signed the MOA? And is that waiver enforceable? Entergy says no because the state Legislature changed the rules when it passed Act 160 stripping the Vermont Public Service Board (PSB) of its authority to issue a new certificate of public good (CPG) without the approval of the Legislature. The state says Entergy is still bound by the agreement because it acquiesced in Act 160 and has derived substantial economic benefit from the MOA. Entergy also argues that it cannot “waive federal preemption.” The state responds that it isn’t a question of waiving federal preemption, it’s a question of Entergy waiving its right to sue. I think the state has the better of the argument on both points. In the 1989 Duquesne Power & Light case, the Supreme Court said that “It cannot seriously be contended that the Constitution prevents state legislatures from giving specific instructions to their utility commissions.”

Estoppel: Closely related to waiver, this doctrine holds that parties cannot disavow prior commitments, or change their legal position, whenever it suits their interests. The state makes a strong case that Entergy has consistently taken the position — before the PSB, the Legislature and the courts – that Vermont retains the authority to decide whether to issue a new CPG for the plant. Entergy has not countered these facts or provided any authority to justify its volte face (about face).

Laches: No, this is not the thing that locks your door. This venerable doctrine holds that a party can be barred from raising a claim due to “unreasonable delay that prejudices the opposing party.” The state says if Entergy was so concerned about the constitutionality of these statutes, why didn’t it raise a fuss about it years ago? If it thought the Legislature had acted unreasonably in taking away the PSB’s authority, why didn’t it say something about it in 2005? If it thought that all of these statutes were just “pretexts’ to hide an unconstitutional usurpation of federal jurisdiction, why didn’t it bring suit way back then? Entergy has provided no explanation for why it waited so long to raise any objection to these statutes. It did make a technical legal argument that its lawsuit did not become “ripe” until the NRC issued the license extension in 2010. Wrong. The U.S. Supreme Court addressed that very issue in the PGE case and held that the utilities were entitled to challenge the California law when it was passed because “postponement of decision would likely work substantial hardship on the utilities.”

Unclean Hands. My favorite. This doctrine says “those who seek equity must do equity.” Equitable remedies are considered “extraordinary relief” that federal courts are hesitant to grant, especially where it would have the effect of trampling state sovereignty. Entergy is asking a federal court to declare a raft of state laws unconstitutional and order Vermont not to interfere with its right to keep operating for (at least) another 20 years. It argues that Vermont not only has no authority to regulate the nuclear safety aspects of the plant (and cannot be trusted even when it says it is not doing that), but that it has no authority to regulate the economic aspects of the plant, either, because only FERC can regulate “merchant” power providers. The upshot is that Entergy basically wants a ruling that it can run Vermont Yankee for as long as the NRC allows even though it never sells another electron to any Vermont customer. This is truly extraordinary relief. No court has ever done anything this radical. If Entergy’s theory of federal preemption is correct, it would apply to hundreds of merchant power plants, both nuclear and non-nuclear, all across the nation. The state argues that Entergy does not come to court with clean hands and has no standing to plead for equity. Exhibit A? The testimony of Entergy’s own vice president, Mr. Hebert, who testified that Entergy’s misrepresentations regarding the tritium leaks, the surprise announcement of the proposed spin-off to Enexus, the failure to meet commitments regarding the decommissioning fund and many other instances of broken promises had so poisoned the well that even a staunch supporter like former Gov. Jim Douglas was moved to publicly announce that he had “lost faith” in the company’s management. I think the state wins this one “hands down.”

It is significant that Judge Murtha called for further briefing on these issues for several reasons. First, he may be looking for a way to avoid having to rule on a tricky preemption issue in a messy fact pattern. The constitutional avoidance doctrine (yes, there is a doctrine for everything) holds that courts should avoid ruling on constitutional questions where there are alternative grounds for disposing of a case (see SWANCC v Corps of Engineers). If Judge Murtha rules that Entergy waived its right to sue or that its claims should be barred, or that the relief it seeks is unavailable, it would not be necessary to reach the preemption issues.

Second, Entergy has not briefed these equity issues. Not one word about them in the briefs that have been filed. Not mentioned in either the opening or the (interminable) closing arguments. Curious. Could it be that Entergy really has nothing to say about them?

Third, Judge Murtha said nothing about these issues in his order denying the preliminary injunction and showed little interest in them up to now. Presumably, he would not call for further briefing and compound an already cluttered record unless he thought they were important. Of course, he could just be crossing all the T’s and dotting all the I’s. But I don’t think so. He has heard enough to believe that Entergy does not deserve to win this case.

Then there is the question about section 248. This one comes out of left field (or is there only right field these days?). Section 248 is the provision that contains all of the criteria the PSB is to consider in deciding whether to issue a CPG. The criteria include everything from economics to reliability to environmental considerations associated with energy facilities. But neither side has raised it as an issue in the case. Under the doctrine of severability (there he goes again), a court may declare that certain portions of a statute may be unconstitutional but that other portions are not. Could it be that Judge Murtha is thinking that he could strike certain language from some of the challenged statutes — for example, the much debated word “safety?”– but still preserve the state’s right to shut Vermont Yankee down for any number of reasons articulated in section 248? Now that’s a fascinating possibility. But pure speculation at this point.

Finally, we come to his last query to Entergy: What is it exactly that you want me to do? This is also interesting. Entergy has not always been clear about which specific statutes must be struck down as unconstitutional. In her opening argument, Entergy attorney Kathleen Sullivan singled out Acts 74, 160 and 189, but in the briefs Entergy cites many other statutes that it claims must be declared invalid. This is where the severability question becomes important. If Entergy isn’t careful, it may miss a statute that will save the state’s authority to shut the plant down. But it also must be careful of trying to bootstrap additional statutes into the case that it has not previously challenged. It is also likely that whatever relief Murtha orders, it will not foreclose the Vermont Legislature from revisiting the question of Vermont Yankee’s continued operation, or perhaps even remanding the case to the PSB.

In sum, though the outcome is still in doubt, I view judge Murtha’s questions as favorable to the state’s case. It will be interesting to see the answers from both sides.

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